Money and Wealth (Part 31) – Pastor Wagner’s Practical Tips on Money Management (Part A)

Click here for the Entire Series and the Outline.

Click here for previous sermon.

Click here for next sermon.

Money and Wealth (Part 31) – Pastor Wagner’s Practical Tips on Money Management (Part A)

Pastor Wagner’s Practical Tips on Money Management

1. Rule #1: Don’t finance anything (with the possible exception of your first house).
   1. If you don’t have the cash in hand to buy something, then don’t buy it.
   2. Never take out a loan for anything except your first (small and modest) house.
   3. Braden, listen to me.
      1. In not that many years, you will want a car.
      2. Start saving for it now so you can buy it yourself with cash.
      3. NEVER buy a car if you don’t have the money in your hand to pay for it!
      4. NEVER take out a car loan!
      5. If you go to a car dealer and he tells you that you can buy a car without paying for it by signing your name on a form and taking out a loan which you will make payments on for years to come, look him in the eye and ask him, “Do you think I’m stupid? Why would I take out a loan and pay interest on a depreciating asset?”
      6. Someday when you are buying something at a store and the cashier tries to get you to apply for a credit card so you can get a discount, look him or her in the eye and say, “I am not a debt-slave, and I never intend to be one.”
      7. If someone ever encourages you to take out a student loan for college, look him or her in the eye and say, “Why are you trying to ruin my life?”
   4. If you do not want to be a slave, never finance anything (Pro 22:7).

2. Rule #2: Pay for things with physical cash, not credit. This will make you much more conscious of what you are spending your money on and will help you to keep within your budget.
3. Rule #3: If you use a credit card, use it as cash and pay it off daily.
   1. NEVER keep a balance on a credit card for more than a day or two.
   2. If you have ever had credit card debt, do not use a credit card, but rather use a debit card.
      1. A man has to know his limitations.
      2. Just as a wise man who was once an alcoholic will never drink (even moderately) again because he knows he has a weakness toward it, so a wise man who once had credit card debt will never use credit card again for the same reason.
   3. Isn’t a debit card riskier if a scammer gets a hold of it?
      1. The bank will give you the same fraud protections with a debit card as with a credit card.
      2. If you leave only $1,000 in your checking account as your “zero” balance, your temporary loses will be small until the bank puts the money back in your account.
4. Rule #4: Get out of debt as quickly as possible.
   1. In order to pay down debt, first stop spending money on unnecessary things like:
      1. Eating out for lunch instead of packing (this can easily cost you $264/month ($12 x 22 days)).
      2. Eating out for dinner (depending on the size of your family and the frequency, one could easily spend hundreds of dollars per month on eating out).
      3. Getting coffee or specialty drinks at coffee shops (one drink per day can easily cost you $150/month ($5 x 30 days)).
      4. Smart phones (easily can cost $100 or more per month depending on the size of your family).
      5. Cable or satellite TV ($65 – $80+ /month) ― getting rid of this filth will save your budget and your soul.
      6. Netflix and similar subscriptions ($7.99 – $24.99/month) ― instead of watching filth, read a book, spend time with your family, or go outside.
      7. Amazon Prime ($14.99/month) ― you can still get free shipping by waiting to place an order until you have $35 worth of items.
      8. Internet ($45 – $100+ per month) ― the Internet is almost becoming a necessity in today’s modern world, but if you are in debt, you could cut it out if necessary and use the library’s connection or free public Wi-Fi.
      9. Pets ― pets are quite expensive (buying the pet, food, vet bills, grooming, flee treatment, boarding, etc.)
      10. Smoking (can cost hundreds of dollars per month – and destroy your health).
      11. Going shopping for clothes you don’t need.
      12. Going out to the movie theater.
      13. Going to professional sports games.
      14. Going to concerts.
      15. Extra cars and toys (four wheelers, side-by-sides, motorcycles, boats, snow mobiles, etc.)
   2. If you are doing any of the previously listed things with any frequency, it is no wonder you are in debt and are struggling to get by.
   3. If you are in debt and/or are not saving money, cutting out these things will save you several hundreds (or even thousands) of dollars per month that you can put towards paying off debt and/or saving money.
   4. Once you have gotten your spending under control by eliminating wasteful and unnecessary purchases, then start working on paying off your debt.
      1. List all of your debts from smallest to largest.
      2. Start with your smallest debt first and attack it with a vengeance, putting all of your spare money each month towards it. Make minimum payments on all other debts.
      3. Paying off your smallest debt quickly will give you a sense of accomplishment and will motivate you to pay off the rest.
      4. After paying off the smallest debt, put all available money toward the next debt, including all the money you were paying on the first debt.
      5. Don’t worry about interest rates, except in the case where two debts are of similar size, in which case pay the one off first which has the higher interest rate.
         • You might think it makes mathematical sense to pay off the high interest loans first.
         • This is not a math problem; it’s a behavior problem. If you were good a math, you wouldn’t be in debt.
         • Pay them off smallest to largest.
      6. Repeat this process as you pay off each debt on the list, smallest to largest.
      7. The money you freed up from paying off the smaller debts will allow you to pay off the larger debts more quickly. Dave Ramsey calls this the Debt Snowball method (more on this below).
      8. Once you’re out of debt, stay out of debt by saving all the money that you were paying on your debts.

5. Rule #5: Create a budget and make it automatic.
   1. “A budget is people telling their money where to go instead of wondering where it went.” (Dave Ramsey quoting John Maxwell, The Total Money Makeover, p. 62)
   2. “You have to tell money what to do or it leaves.” (Dave Ramsey, The Total Money Makeover, p. 97)
   3. “Money won’t behave unless you tame it. P.T. Barnum said, ‘Money is an excellent slave and a horrible master.’ You wouldn’t build a house without a blueprint, so why do you spend your lifetime income of over $2 million without a blueprint?” (Ibid)
   4. “Is anyone in your household responsible for budgeting? All too often the answer is “not really.” All too often people allow their income to define their budgets. When we tell our audiences about the budgeting and planning habits of the affluent, someone always asks a predictable question: Why would someone who is a millionaire need to budget? Our answer is always the same: They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.” (Thomas J. Stanley, The Millionaire Next Door, pp. 39-40)
   5. Find a bank or credit union which allows you to open up many checking and savings accounts (10 or more―20 would be better) under one login.
   6. Set up different bank accounts and automatic transfers to transfer set amounts of money every time you get paid to those different accounts for various things such as (these are my recommendations):
      1. God’s money fund (I recommend 10% of your gross income – see Giving to God series)
         • Remember, God gets the firstfruits, not the leftovers (Pro 3:9-10).
           1. If you give God the firstfruits of all your increase, He promises to bless you with abundance.
           2. The reason that some Christians don’t do this is because they obviously don’t believe that God will do what He says He will.
           3. If they believed God, they would do it.
         • If you skimp on God, you will not prosper (Hag 1:3-9).
           1. Do you feel like you are always struggling to get by? Consider your ways.
           2. Do you wonder why you can’t ever seem to get ahead? Consider your ways.
           3. Do you wonder why you can’t ever seem to get out of debt? Consider your ways.
      2. Generosity fund
         • Put a set amount of each paycheck in this fund to be used to be generous towards others.
         • This is different from God’s money.
         • This money can be used to give gifts to people, give them money to help them out, do random acts of kindness, take people out to eat, donate to causes or organizations you believe in and want to support, etc.
         • Having a generosity fund will help people who are irresponsible with their money to be more careful, and it will help those who are not naturally generous to be so.
      3. Taxes fund
         • This is essential for anyone who is self-employed.
         • Put a set percentage, based on your income level and tax bracket, of all income you receive into this fund.
         • You will then use this fund to pay your quarterly taxes and any taxes that are due at filing time.
         • Make the percentage higher than you think it needs to be.
         • If you put too much in this fund, it just becomes extra savings you can use for something else next year.
         • If you don’t put enough in it, you will be in a pickle next April.
      4. Emergency fund
         • After paying off your debt, put every spare dollar in this account until it is fully funded with 3-6 months of living expenses.
         • This is your rainy-day fund for when unexpected things come up such as house repairs, health costs, child related costs, etc.
         • This fund will also give you peace of mind in case of a job loss.
         • You should have enough to cover all your expenses (not your income) for at least three to six months with no income.
         • This fund should be liquid, meaning that you can easily and quickly access it.
           1. A separate high-yield savings account or money market account is a good place to keep your emergency fund.
           2. It should not be in CDs, stocks, or precious metals because these are not liquid enough.
           3. It should not be too easy to access though, such as in your checking or savings account along with the rest of your money.